The testimony has been prepared for Cook's appearance before the U.S. Senate tomorrow

Apple CEO Tim Cook's testimony on corporate tax laws has been made available on the Web just one day before he is expected to appear before the U.S. Senate.

The PDF of Cook's statement aims to defend the way Apple pays taxes and offer suggestions for a revenue-neutral reform that brings foreign profits (made by U.S. companies) back to the U.S.

The statement opens with an explanation of how Apple employs tens of thousands of U.S. citizens, and has paid "an extraordinary amount" of taxes in the U.S. According to the PDF, Apple paid nearly $6 billion in federal taxes in fiscal 2012 and the company expects to pay $7 billion in 2013.

Apple, a California company, employs tens of thousands of Americans, creates revolutionary products that improve the lives of tens of millions of Americans, and pays billions of dollars annually to the US Treasury in corporate income and payroll taxes. Apple’s shareholders – from individuals and institutions to pension funds and public employee retirement systems – have benefitted from the Company’s success through the appreciation of its stock price and generous dividends. Apple safeguards the capital entrusted to it by its shareholders with prudent management that reflects the Company’s extensive international operations. Apple complies fully with both the laws and spirit of the laws. And Apple pays all its required taxes, both in this country and abroad.

The testimony continues on to say that Apple doesn't use tax gimmicks and even describes (at length) the history of Apple. It says that Apple supports a simplification of the tax code, even if that leads to an increase in Apple’s overall corporate taxes. Apple went on to say that the current corporate tax system “applies industrial era concepts to a digital economy” and “undermines U.S. competitiveness."

The testimony goes into other specifics, such as Apple's how Apple accounts for U.S. profits, how research and developments costs are shared with its Irish subsidiary, etc.

The Irish subsidiary is an important topic because of an attack from The New York Times last year. In April 2012, NYTaccused Apple of dodging millions of dollars in taxes in California and 20 other U.S. states (and dodging billions of dollars in taxes worldwide) by routing its money through other locations. Even though Apple is based in Cupertino, California, it put an office in Reno, Nevada which allows Apple to escape California's 8.84 percent tax rate for Nevada's 0 percent. Apple has also sold digital content from low-tax countries anywhere around the world, and has used the "Double Irish With a Dutch Sandwich," which allows Apple to cut taxes by directing profits through low-cost Irish subsidiaries, the Netherlands and the Caribbean.

What does Apple want? A tax system that is "revenue neutral, eliminates all tax expenditures, lowers tax rates and implements a reasonable tax on foreign earnings that allows free movement of capital back to the US."

The Senate also released a part of its investigation today, which claims that Apple’s system of subsidiaries has allowed it to dodge $44 billion in U.S. taxes over the last four years. But the Senate also mentioned that Apple did not break any U.S. laws.

Cook and CFO Peter Oppenheimer will appear in front of the U.S. Senate Permanent Subcommittee on Investigation at 9:30 a.m. EST on May 21, 2013. The hearing is titled "Offshore Profit Shifting and the U.S. Tax Code - Part 2" and concerns corporate tax laws and profit shifting.

According to the NY Times today, Apple actively evades taxes. Legally because they employ very expensive and very smart tax lawyers. From the US they move their profits to Ireland so they pay minimal taxes here. In Ireland they claim their headquarters are in the US so that they don't owe any taxes in Ireland according to Irish law.

They can do this because they are an international corporation. They have thousands of US employees and tens of thousands of manufacturer's employees in China. They manufacture high quality products for cheap in China and charge high US prices here. Big profit margins. Very little US taxes. Most of their "income" is recorded by their accountants in other countries so that they don't have to pay US Federal or state taxes.

If you and I could do what they do, we would not have to pay any income tax. Of course, that means that we would not have roads to drive on, police protection or public schools for our children.

Yes, they are right that the US Federal taxes need to be reformed since they are too easy to game and avoid if you are Apple.

If they don't have to pay much Federal taxes, then the value of their stock rises and the wealth of their CEO increases. The odds are that their senior management does not pay much income taxes. Only capital gains (max 15%). That is just a guess on my part. But, considering how they manage to use tax loop holes to avoid corporate taxes, I would suspect that the same tax lawyers found ways for their senior executives to avoid US taxes.

"Intel is investing heavily (think gazillions of dollars and bazillions of engineering man hours) in resources to create an Intel host controllers spec in order to speed time to market of the USB 3.0 technology." -- Intel blogger Nick Knupffer